McPherson drivers pay higher prices at pumps

Friday

Jul 26, 2013 at 11:48 AM

As people gear up for summer vacations, they are eying the pump and searching for the best prices.

By Cristina JanneyManaging Editor

As people gear up for summer vacations, they are eying the pump and searching for the best prices.McPherson residents may have noticed the prices they pay at the pump are at times higher than those in surrounding communities.As of Thursday, GasBuddy.com reported McPherson gas prices ranged from $3.59 to $3.99 per gallon. GasBuddy.com allows consumers to post the latest gas prices and then search for the cheapest gas in their area.Outside of McPherson, Salina posted the cheapest and the next most expensive gas with a range of $3.45 to $3.64.If you can gas up at one of the McPherson stations that is at the low end of the range, you will still be paying less than the national average, which was $3.67 a gallon as of Thursday.

Gasing up out of townJean Norbert, McPherson resident has noticed the differences in the gas prices and said it has changed his purchasing habits. When traveling outside of McPherson, he said he always fills up before he comes home. He said he knows others who are doing the same. He also encourages friends and family members who are coming to McPherson to fill their tanks before they leave home.Norbert wanted to know why McPherson's gas tended to be more expensive than surrounding communities.Gregg Laskoski, GasBuddy senior petroleum analyst, tried to shed some light on why gas prices may differ from city to city or even within a single metro area.He said gas variances of 30 cents are fairly common in metro areas, and a recent survey of Miami found a gas gap of more than $1 a gallon.

TaxesTaxes can be a leading reason gas prices vary between cities and states. Kansas has higher taxes, than Missouri, which makes gas here more expensive.McPherson has a 1 percent city sales tax, which is added to every gallon of gas purchased in the city limits.

What about NCRA?Freight plays a role in gas prices, so consumers might think they should be getting a deal on their gas because there is a refinery in the city's backyard.NCRA is part of a cooperative. It is a wholesaler of gasoline and diesel fuel. The fuel sold at local gas stations does not necessary come from NCRA, and NCRA does not control the prices at those local stations.

Volume discount?Volume plays a role in gas prices. The majority of McPherson residents buy their local gas from convenience stores. These stores have a very low profit margin on the gas. They are trying to use the gas to entice customers into to the store to purchase drinks and snacks from which they reap higher profits.The more volume a store does in gas, the lower price they can charge. In addition, stores with higher volumes may be able to secure a volume discount on their fuel purchases.Volume pricing is the case in most retail settings. A small independent shoe store is not going to be able to sell at the same price as a store the size of Walmart, Laskoski said.In smaller communities, competition also might be a factor. In areas where there are more gas stations, there is more competition and prices tend to be lower, he said.The income median in a community also may be telling. A community of residents with higher incomes tend to be less sensitive to fluctuations in the price of gasoline.As in other industries, gas stations will charge what the market will bear.

Location, location, locationIn McPherson, the higher prices at the pumps often can be seen closer to Interstate 135. Laskoski said this also is a common practice. "It is not uncommon on an interstate or when you have a close captive audience for people to feel this is the last chance for you to get gas," he said. "On the interstate, people are more likely to take what they know is readily available rather than drive past not knowing where the next station may be. They are willing to pay a premium."None of the local gas stations in the community the Sentinel contacted wished to go on record about their gas prices.A local manager at Casey's general Store said a local supervisor keeps on top of local trends in fuel prices, and the price is set by the company's corporate office in Ankeny, Iowa.

What's on the horizon?Although prices in Kansas have jumped 23 cents per gallon in the last month, Laskoski said prices have flattened for now.General trends in gas prices are affected by a number of local and global factors. The U.S. Department of Energy issues a weekly report on Wednesdays that alerts companies about U.S. oils supplies and production.Although unrest in the Middle East has affected oil futures, Laskoski said domestic events likely will have more effects on gas prices in the coming months.The U.S. Weather Service has predicted a more intense than normal hurricane season this year. Hurricanes in the Gulf of Mexico can result in damage to off-shore oil rigs and cause the closing of refineries in Mississippi, Louisiana and Texas.Shutting down a refinery is not as easy as flipping a switch. Refineries can take up to a week to shut down and two weeks to restart and resume production at full capacity. Even the threat of a major storm in the region can cause crude oil futures to rise, Laskoski said.